Mr Bibek Debroy

Negative ratings on India exaggerated

Not only are the external debt indicators reasonably good; but India has an impeccable record of repaying external debt. Read More >>

Mr Bibek Debroy: I don't think that the rating agencies have exactly covered themselves in glory in the recent past. And I am not just saying this in the context of India but in the context of several other countries also. And clearly in terms of the rating agencies, there is a bias in favour of the developed countries and against the developing countries. So they tend to rate the developed countries unnecessarily high and downgrade the developing countries too much. Having said that, what are our concerns about the Indian economy? Apart from the broad spectrum of reforms, the fundamental concern is about domestic debt. But when the rating agencies, and I am not taking names, rate India and downgrade India, they downgrade India on the external debt ratings. I don't think there is any case at all for downgrading India on the external debt ratings because not only are the external debt indicators reasonably good; India has an impeccable record of repaying external debt. In that sense also, the rating agencies tend to over-exaggerate the problems that India faces. Read Less >>

Potential of India's unorganised sector

Since 1991, when India's growth has been high, a large part of it has been driven not by the organised sector, but by the unorganised sector Read More >>

IBEF: India's bottom up story has seen the rise of newer models of innovation and entrepreneurship. How do you see this story shaping up? Mr Bibek Debroy: Unlike several developed countries and like several Asian countries, a large part of the Indian economy is still in the unorganised/informal sector. And I am using the words unorganised and informal synonymously, although one can get into statistical issues of definition. And it's important to remember this, because a large part of the Indian economy, a large part of the Indian employment still originates in the so-called self-employed sector. And when I am saying this, I am not just talking about the agricultural sector; I am talking about the non-agricultural sector. And the reason for saying is that whenever we think of words like innovation, we tend to think that it is associated with the corporate sector or the corporate organised sector. That's not necessarily the case. There is a tremendous amount of innovation that takes place in the informal/unorganised sector – the small & medium enterprises (SMEs) and even in the agriculture sector. The problem with all of this is that sometimes when I am in this sector, I don't always realise that my innovation is in the nature of an invention. When I realise that it is an invention, I don't necessarily know that it has commercial value. When I realise that it has commercial value, I don't necessarily know that I can get access to kind of venture capital funding that is needed to commercialise that kind of invention. In other words, there is a tremendous amount of entrepreneurship in India. And since 1991, when India's growth has been high, a large part of it has been driven not by the organised sector but by the unorganised sector. Read Less >>

India's role in the global economy

The main drivers of growth (in the Asian region), because of their sheer size, have been India and China. Read More >>

Mr Bibek Debroy: Again, there are different ways of responding to that, because when we say India's role in the global economy, the obvious answer is in terms of imports and exports of goods. And indeed, India's share may not have increased that dramatically, but whether it's imports or exports of goods, India is much more open to the outside world today. More important, of course, has been India's success in exports of services. And that is one of the reasons why we have had a reasonable exports success since 1991. Also, in addition, because India has opened up, there has been a globalisation of all kinds of markets. When I say all kinds of markets, I am talking about foreign exchange markets, capital markets, markets for technology, intellectual property rights, management skills, etc. After all, it's a globalised world, and that is one of the reasons why one is exposed to greater uncertainty. Globalisation almost automatically means that there will be volatility and uncertainty, whether it is in capital markets or whether it is in exchange markets. The simple point to me is that much of the downturn that we have witnessed is in the developed countries in the West. And much of the growth, despite what we have seen in the last, say, 3 years, has been happening in the Asian region. Growth is not just an end in itself; it is also important in terms of reducing poverty, generating employment, etc. And the main drivers of growth, because of the sheer size, have been India and China. And I think that will continue to be the case in the next several years. Read Less >>

India's strength lies in inputs

One of the interesting things that have happened in the last ten years is that some of the historically backward states have begun to grow, and have begun to grow very, very fast Read More >>

Mr Bibek Debroy: Well, the first point to make is that India is a very heterogeneous country and there is a reason why I am making that point. India is a very heterogeneous country and there are a lot of variations across states. And one of the interesting things that have happened in the last ten years is that some of the historically backward states have begun to grow, and have begun to grow very, very fast. And there is a lot of slack in that system. For example, if I look at a state like Bihar, the growth has fundamentally been construction driven. But there is an enormous amount of (and I am just using Bihar as an example) slack there in terms of boosting agriculture. The simple point that I am trying to make is that India's competitive advantage is in inputs. And it is that which is going to drive India's growth in the next several years. Read Less >>

Factors favouring India in the current environment

Potentially, India has the possibility of very high rates of GDP growth… There is no particular reason why India should not be growing at around 8 per cent. Read More >>

Mr Bibek Debroy: I think the most important thing to remember is that potentially, India has the possibility of very high rates of GDP growth. For various reasons, the rate of GDP growth has slowed down now and it's about 5-5.5 per cent. But the point is that it is not going to remain at 5-5.5 per cent. Yes, the external environment is not very conducive and India's exports are suffering. All of that is true. But there is no particular reason why India should not be growing at around 8 per cent. I am not saying 10 per cent, but 8 per cent. And that has all kinds of implications, in terms of the low base; the so-called middle class, however you choose to define it; as a source for manufacturing and as a consumer market. Read Less >>

Exclusive Interview on Indian Economy with Mr Bibek Debroy, Professor, Centre for Policy Research

As a professional economist, Mr Bibek Debroy's key focus areas are economic policy analysis & law, regulation and the state. Mr Debroy has a rich academic experience spanning distinguished institutes like Presidency College, Indian Institute of Foreign Trade, National Council of Applied Economic Research (Delhi) and Rajiv Gandhi Institute for Contemporary Studies, Rajiv Gandhi Foundation (where he was Director). He has also served as Consultant to the Department of Economic Affairs, Ministry of Finance, Govt. of India; Secretary General, PHDCCI and Director, "LARGE" (Legal Adjustments and Reforms for Globalising the Economy), an initiative of the Finance Ministry and UNDP. He is presently a member of the National Manufacturing Competitive Council. In this exclusive interaction with IBEF, Mr Debroy discusses the key underlying themes that are expected to propel the Indian economy going forward.

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